Car dealerships offer long-term prospects for investors despite some market headwinds, according to Rapleys.
The property consultancy said that dealerships were facing a core trend of accelerating structural transformation, attributed to ongoing rapid expansion from Chinese manufacturers, a ‘growing tension’ between the UK Government’s ZEV mandate requirements and consumer demand for EVs, and disruption caused by US trade tariffs.
Despite these factors, Rapleys points to total UK new car registrations exceeding two million over the last 12 months for the first time since 2019, and says that capital values on prime, multi-franchise or freehold sites with strong covenants remain strong, with moderate rental growth expected.
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The findings come from Rapleys’ latest Alternatives View report, which considers car dealerships alongside other types of property including drive through food and drink establishments, EV infrastructure sites, motorway service areas, filling stations and self storage facilities, assessing performance, outlook, challenges and opportunities.
Rapleys found that self storage and drive throughs in particular continued to outperform the market.
It said motorway service stations had seen a major positive shift towards new investment, while filling stations held firm fundamentals, and EV charging sites required strategic upfront preparation to take advantage of expected growth in demand.
Two categories of business noted
Daniel Cook, head of commercial and automotive, roadside and future fuels at Rapleys, said: “The automotive and roadside sectors we have covered in this report fit broadly into two categories when it comes to performance and outlook: fast-paced growth and resilience.
“Those fitting into the fast-paced growth category are drive throughs and self storage, both of which saw a continuation of the growth trajectory they’ve experienced over the last few years with strong investment activity and interest, and motorway service stations thanks to £1.2 billion of investment programmes unlocked in the last 12 months.
“In the resilience category are car dealerships, EV sites and petrol forecourts; all of which have encountered numerous headwinds but have continued to see activity, interest and mixed levels of growth. All show longer term growth prospects for patient investors reassured by these assets’ ability to perform despite their challenging environments.”